Gas Against Rubles. The picture is clarified and we see the consequences for the Euro
Finally some clarity on the “Rubles gas bill” scheme that Russia wants to propose to the “Hostile” Western countries. The fencing is nothing more than the payment to Gazprom in Euro with subsequent immediate conversion into Rubles at the exchange rate established on the day by the Russian Central Bank. A scheme that is therefore “Business as usual” since Gazprom was already exchanging Euros for Rubles before, but which becomes more stringent for the definition of the exchange by the Russian side.
Apparently Putin wants a series of guarantees that these further reservations do not fall under some form of sanction, and this was probably the meaning of a round of phone calls with European leaders. Funny that Scholz asked for "Written information to understand better". So we'll see Moscow send a simplified politician-proof sketch.
Given the economic sanctions in this way, the Euros that Russia obtains from the payment of gas could not be reused for the purchase of goods in the Eurozone. A glaring mistake made when these broad and absolute sanctions were assessed. Now to expect Moscow to keep its money, legitimately acquired with gas contracts, firm and untouched to please the Europeans seems, frankly, an unsustainable claim. If we don't want to trade with Moscow, the solution is simple: don't buy gas, oil or coal. Can not be done? So we need to practice a bit of Realpolitik, of political realism, after having driven out all those who have made these mistakes from every position. And there are so many.
What will happen is being said by the trade and current account balances of Russia and the euro area
The Russian data, first of Trade Balance and then of "Current items", that is, of financial movements also related to investments and divestments, are as follows
Current Games
This is the Euroarea situation. Trade balance
and current accounts
It seems obvious that, at least in the short term, the Euro will devalue against the Ruble. The more sanctions we put in place, the less we export to Russia, the more this movement will be visible. Then in the medium, if the energy cords are really cut, things may change, but there is no political force that can hide the basic economic dynamics. The war devalues the Euro, which is the real earthenware pot in this situation. Other than "Protection from the Euro".
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The article Gas Against Rubles. The picture is clarified and we see the consequences for the Euro comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/gas-contro-rubli-si-chiarisce-il-quadro-e-vediamo-le-conseguenze-per-leuro/ on Thu, 31 Mar 2022 09:00:04 +0000.